Released on: May 12, 2008, 5:14 am

Press Release Author: Jim watson

Industry: Real Estate

Press Release Summary: Up until today it had not seemed to be a good week for news
emanating from the Bank of England.

Press Release Body: Up until today it had not seemed to be a good week for news
emanating from the Bank of England.

Firstly, we had the news that in March the number of mortgages approved had dropped
from 72,000 in February to just 64,000. Then yesterday brought governor Mervyn
King\'s declaration before members of parliament that the recent £50 billion bond
scheme announced last month was not an attempt to provide an immediate boost to the
mortgage industry, even if this was hoped to be a longer-term consequence of the
improvement in confidence in the banks that Mr King stated to be the principal aim
of the move.

This second element may seem to be at odds with the expectations of government, in
respect of the recent meeting held in the wake of its announcement by chancellor
Alistair Darling and housing minister Caroline Flint with the Council of Mortgage
Lenders. The joint statement which followed the meeting said: \"The group confirmed
that this is an important step to tackle funding market difficulties, helping to
bring further stability and confidence to the financial markets, and in due course
should help banks and building societies to ensure that competitive mortgage
products are available to potential
borrowers.\" In the light of this, Mr King\'s comments this week may seem
surprising.

But that could be a matter of nuance. A quick boost to the mortgage market may be a
bigger priority for a government trailing in the opinion polls and facing electoral
tests at local level today and in a by-election later this month. But from a wider
perspective, it may be considered that the re-establishment of confidence in the
banking sector first is the foundation upon which a sustainable mortgage market
recovery must be built, so that the priority outlined by Mr King will still have
such benefits in the longer run.

Today may have brought the good news that this is indeed how the Bank expects
matters to progress. In its Financial Stability Report, deputy governor John Gieve
acknowledged that the credit crunch was partly an \"unavoidable\" correction of a
situation in which risk pricing was \"unsustainably low\" last year. However, he
continued, the opposite was now true, with the aversion to risk being
inappropriately high.

As a result, he forecast, the situation should now change for the better, stating:
\"While there remain downside risks, the most likely path ahead is that confidence
and risk appetite will return gradually in the coming months.\" He added that the
recent bond scheme was all part of a plan to build the recovery in confidence.

Such a view will be music of the ears of those hoping that the green shoots of
recovery will emerge soon. Further encouragement may be found from the words
yesterday of Simon Rubinsohn, senior economist at the Royal Institution of Chartered
Surveyors. Analysing the latest house price figures from Nationwide which had
revealed a drop in house prices over the late year, he said such findings were bad
news for first-time buyers, yet noted: \"The level of buyer enquiries is still more
consistent with the 2004/ 2005 experience rather than the collapse in the market in
the early 1990s.\"

This, Mr Rubinsohn suggested, could mean any improvement in market confidence
brought about by the Bank of England\'s recent liquidity scheme \"could provoke a
modest pick up in activity in the market in the second half of the year\".

So while the current picture may appear gloomy, the reality may be that the
financial situation could be about to turn the corner. The credit crunch may have
brought banks and borrowers alike back down to Earth and the future could still see
far less easy credit than has been available in recent years. But if this is indeed
the beginning of the end of the credit crunch, the prospect may be that of slow but
steady growth emerging in the next few months. If so, this could be a promising time
to invest in property.

In today\'s world Property investment is an excellent investment option especially
investment in UK

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